Public money for private greed
The corporations promoting privatization of Canadas public services may lack the name recognition of companies that produce consumer goods but in many cases, the scale of their global sales and profitability places them among the corporate elite.
In the health sector, Marriott, MDS, Liberty Health, Extendicare, Baxter, Bitove, Cara and Aramark are major players. In the municipal and utilities sectors, one finds BFI, WMX Technologies, Suez Lyonnaise des Eaux, Philip Services Corporation, USA Waste Services, Serco and United Utilities. In education, the names include ServiceMaster, Johnson Controls and Education Alternatives Inc. Others such as Laidlaw operate across a range of sectors. And then there are the consultants such as Andersen Consulting, KPMG and Coopers Lybrand who make billions encouraging governments around the world to privatize public services.
Suez Lyonnaise des Eaux
Suez Lyonnaise des Eaux controls the water of 68 million people in 39 countries. The French-based multinational had sales of US$56 billion in 1997. Water makes up half its worldwide business, with the remainder in waste management, construction, energy, communications and transportation.
The companys ventures into water services have left in their wake price hikes, reduced service, pollution and corruption. SLEs track record includes company executives convicted of bribery in France, doubling water prices in Britain and polluted water supplies in Australia and South Africa.
SLE is setting its sights on Canadas water and sewage systems through its Canadian subsidiary United Water Services. UWS was recently involved in a bid to take over Peel Regions water operations, and is on the shortlist to run a sewage recycling project in Toronto, opening the door to the all-out privatization of Torontos water services.
SLE already has a foothold operating water services in Quebec and elsewhere in Canada but its not just interested in water. Working through a subsidiary, GTMI, SLE has a 25 per cent stake in a toll highway through New Brunswick. SLE and its consortium partners stand to make more than $1 billion profit over 30 years from lease and maintenance payments. SLE will also reap profits from the Confederation Bridge, built and operated by its subsidiaries GTMI and Janin. While construction costs went well over budget, SLE stands to make a bundle thanks to a 35-year deal assuring them $42 million annually in federal subsidies plus the revenue from tolls.
ServiceMaster is cleaning up when it comes to making money on contracted out and privatized services. The companys 1997 revenue topped US$5.5 billion, a 13 per cent jump from 1996. The corporate giant is best known for its management of cleaning and maintenance contracts in schools, hospitals and other public institutions.
In case after case, ServiceMasters cost-cutting has meant dirty, unsafe public schools and new health hazards for workers and students. Washington, D.C. school officials cancelled a school maintenance contract in 1996 when the citys Inspector General found the company overbilled the district by $6.5 million.
Parents and school officials at one Louisiana school have sued ServiceMaster for pesticide poisoning and the nearly $1 million in cleanup costs. Custodians sprayed Lindane, a chemical legal only for outdoor use, inside a school four hours before it opened. Children came home with headaches, nausea and abdominal pain.
In one Ontario case, in-house custodians and maintenance staff are being replaced as vacancies arise with ServiceMaster franchise employees. The franchise workers lack experience and training in health and safety procedures are paid a lower wage than in-house staff. Franchise workers rotate through schools, providing no continuity and high turnover.
With contracts around the globe in management and technology consulting, its no wonder multinational Andersen Consultings 1997 revenues shot up 25 per cent from the year before, topping $6.6 billion. The restructuring giant employs 59,000 people in 46 countries.
One of Andersens specialties is reengineering welfare and social security systems. Their fee structure is often based on the savings they produce, creating a drive to eliminate workers and get individuals off the welfare rolls at any cost, regardless of where they end up.
Andersen has come under intense scrutiny in Ontario, where the provincial auditor general recently concluded the consulting firms $180 million contract to reform the provinces welfare system was riddled with loopholes, unaccounted-for costs and inflated fees.
Andersen-engineered reforms of the New Brunswick social assistance system meant the elimination of one quarter of welfare staff, with remaining workers allowed to spend no more than 4.5 minutes per month with each client. Andersen was also involved in an ill-fated attempt to reform New Brunswicks justice system. Andersens high-tech video links and computer networks never materialized, thanks to never-ending delays and escalating costs. The government had to pay $3 million to get out of the $60 million deal.
In the United Kingdom, Andersens redesign of the social security department wasnt completed on time, leaving the government to estimate benefits for 100,000 claimants. The new computer system set up to deal with National Insurance records is in chaos, with millions of pensioners owed over $2 billion. The system, switched on in July, had to be shut down almost immediately due to technical problems.
MDS advocates an increased private sector role in the delivery of health services, its rapid growth fuelled by healthy injections of funds destined for the public health sector. The health and life sciences corporation racked up $819 million in 1997 revenues. It operates a network of clinical laboratories and manufactures medical supplies. Other activities include the distribution of medical equipment, occupational health programs, computer billing services for physicians, and medical office building development. Laboratories account for 35 per cent of the companys revenues.
The MDS strategy is to diversify into all areas of health care to take advantage of the move from institution-centred health care to community-based and family-based care. The company is expanding by buying up smaller private operations and securing contracts with governments and public health care facilities.
As MDS and other private lab companies have siphoned growing numbers of patients from the hospital sector to private labs, testing costs have soared.
MDS also deals in venture capital, investing in projects with export potential. The corporation is a major shareholder in more than 40 health care companies, with combined revenues topping $250 million. With revenues predicted to break $1 billion by 2000, MDS is positioning itself to carve out an even bigger piece of the health care pie.